Third Quarter 2007 Results Presentation 6 November 2007
Third Quarter 2007 Results
Presentation
6 November 2007
2
Agenda
• Results Overview
• Performance Trends
• Results of Key Subsidiaries
• Conclusion
3
Third Quarter Core Net Profit up 12%
(18)51812379425Core Net Profit17(125)34(109)(146)Tax & Minority Interests
155819473565Net Interest Income
(13)53222379463Reported Net Profit
(55)4(57)42Associates & JVs
16115--38Tax Refunds
(345)16n.m.(3)(39)(Allowances)/Write-back
-(12)3(11)(12)Amortisation of Intangibles
(2)63424498620Operating Profit3(416)28(333)(427)Operating Expenses
-1,050268311,047Total Income(2)49335357481Non-Interest Income
+/(-)%S$m+/(-)%S$mS$m
QoQ2Q07YoY3Q063Q07
4
Core Net Profit for Nine Months up 44%
441,0111,453Core Net Profit32(324)(427)Tax & Minority Interests
251,3031,631Net Interest Income
101,4931,642Reported Net Profit
143922Associates & JVs
(61)481190Divestment Gains/Tax Refunds 1/
(349)9(23)(Allowances)/Write-back
8(32)(35)Amortisation of Intangibles
421,3491,916Operating Profit21(989)(1,195)Operating Expenses
332,3393,111Total Income431,0351,480Non-Interest Income
+/(-)%S$mS$m
YoY9M069M07
1/ Net divestment gains of S$90m in 9M07 and S$481m in 9M06; tax refunds of S$100m in 9M07
5
Key Financial Ratios – Based on Core Earnings
15.7
15.4
104.0
2.4
77.4
39.6
46.9
2.13
%
2Q07
97.1107.297.1107.2Allowances/NPLs
12.311.511.214.1ROE
12.711.811.514.5Cash ROE
82.677.682.677.6Loans-to-Deposits Ratio
43.046.044.347.6Non-Interest Income/ Total Income
3.3
40.0
2.06
%
3Q06%%%
2.13.32.1NPL Ratio
40.842.338.4Cost-to-Income Ratio
2.071.982.08Net Interest Margin
3Q079M069M07
6
Bank’s CDO Portfolio
(16)(3)*372- Corporate CDOs
-(221)270- ABS CDOs
(16)(224)641Total CDOs
Cumulative Adj. to Fair Value Reserves(taken to Equity)
3Q07 Allowance/ MTM Loss
(taken to P&L)
Investment Amount
(S$m)
* MTM loss in the value of credit default swaps embedded in some of the corporate CDOs
• ABS CDOsSwitched from counterparty quotations to third party valuation model
• Corporate CDOsContinue to use counterparty quotations S$104m of CDOs will mature in Nov 08, and S$60m in Sep 09
• No defaults or downgrades in any CDO as of 30 Sep 07, but S$57m of ABS CDOs that showed signs of weakness were classified as non-performing assets
7
Great Eastern’s CDO Exposure
• Outstanding investment portfolio of S$176m (MTM basis) as at 30 Sep 07, inclusive of new S$30m investment in “AA” corporate CDO tranche in Aug 07
S$9m under shareholders’ fundsS$167m under life funds (out of total life fund assets of S$42bn), including S$18m ABS CDOs with some US sub-prime exposure
• MTM value fell by S$28m during 3Q07, immaterial impact on P&L:S$3m taken to fair value reserves in shareholders’ fundsS$25m taken to life fund assets
• Policyholders own investment-linked policies (ILP) of S$583m related to CDOsIncludes new S$186m ILP successfully closed in Oct 07, invested in “AA” corporate CDONo US sub-prime exposureAll returns and risks borne by policyholders
Lion Capital: S$5.6 bn CDOs under management as at 30 Sep (no change from June)S$1.5 bn in ABS CDOs with some US sub-prime exposureAll returns and risks borne by investors
8
Agenda
• Results Overview
• Performance Trends
• Results of Key Subsidiaries
• Conclusion
9
1.84%2.00%
2.08%
1.89%2.00% 2.06% 2.03% 2.04%
2.13% 2.07%
395435
473 491 508
558 5651,597
1,7941,631
2005 2006 9M07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07
Net interest margin
Net interest income (S$m)
3Q07 Net Interest Income up 19% YoY
10
329
598
506
412
515
83
921,448 1,480
59892
493
348
845
357
495 481
2,045
1,289
1,573
2005 2006 9M07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07
44.7%46.8%
43.1% 43.0%46.9% 46.0%44.7%
47.6% 49.9%45.7%Non-
interest income/
Total income
Non-interest income(S$m)
Non-interest Income sustained in 3Q07 despite market turmoil
Divestment gains Excluding divestment gains
11
18.9% 18.7%17.8%
20.7% 20.2%
17.5%17.6%18.4%
19.5%18.5%
140 141155 161
178
211217507
597 606
2005 2006 9M07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07
Fee income/
Total income
Fee income(S$m)
Excluding divestment gains
3Q07 Fee Income up 36% YoY
12
40.8%41.5%39.6%39.6%
38.4%
34.7%37.9%
45.6%
40.0%41.1%
170 179 179 193 200 231 247
69 83 64 62 6987 7168
87 89 87 83
98 108
634 722 679
233277
278 289
227
3321,145
1,3311,195
308349 333 342 352
416 427
2005 2006 9M07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07
Operating Expenses
(S$m)
Cost-to-Income Ratio
Staff Costs Property & Equipment Others Excluding divestment gains
Higher Expenses from Increased Staff Costs and Business Expansion
13
3Q07 Core Operating Profit up 24% YoY
Operating Profit before allowances (S$m)
Divestment gains
662
416
561
92
835151,911 1,916
598
92634 620
754
644
498
931
435
2,008
2,508
1,742
2005 2006 9M07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07
14
(16)
39
12
0.33
(5)(7)
12
2
23
2005 2006 9M07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07
Allowances for loans and other
assets (S$m)
Allowances
15
1(18)(82)6(103)Specific allowances/ (write-back) for loans
(16)
2
-
S$m
2Q07
-221-221Allowances for CDOs
3
2
S$m
3Q06S$mS$mS$m
39(9)23Total net allowances/(write-back)
(101)(16)(95)Allowances/(write-back) for other assets
3Q079M069M07
CDO-related allowances partially offset by net write-backs for loans and properties*
* The properties involved are now carried at the original acquisition cost
16
432
518510
314
425
77
90
48138
47
1,4531,443
559100
532
318
795
379
510
647
463
1,642
2,002
1,298
2005 2006 9M07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07
10.8%
15.4%
11.5%11.4%
14.1%
15.9%
13.8%
10.4%
12.3%11.8%
14.4%
12.2%
Net Profit(S$m)
ROE(%)
Divestment gainsExcluding divestment gains/ tax refunds
Tax Refunds
Quarterly ROE Included Effect of Bank of Ningbo Surplus of S$1bn
Core ROE excluding Bank of Ningbo surplus
17
Earnings Contribution by Segments
Insurance & Others
19%
Treasury14%
Consumer Banking
26%
Business Banking
41%
PBT by Business Segment PBT by GeographyOther Asia
Pacific3%
Others1%Other
ASEAN4%
Malaysia19%
Singapore73%
9M07 Profit Before Tax & MI : S$1,880m(excluding divestment gains)
9M07 Profit Before Tax & MI : S$1,880m(excluding divestment gains)
18
Loans (S$bn)
Loans Growth of 15% YoY, 4% QoQ
InternationalMalaysiaSingapore
38.1 38.6 38.9 39.5 40.5 42.8
11.58.8 9.6 10.3 11.2
11.913.7
41.3
10.49.6 9.8 10.110.9 11.0
13.056.659.4 61.1
65.3
58.1
63.368.0
Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07
19
Deposits Up 23% YoY, 4% QoQ
Loans-to-deposits
Current AccountSavings DepositsFixed Deposits
41.1 45.4 46.7 50.2 51.8 57.2
11.010.8 10.6
11.2 11.712.9
9.09.5 9.2
10.0 9.911.6
11.6
53.2
13.0
85.7
78.075.169.668.7
64.5
82.2
Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07
Others
Deposits (S$bn)
Including FRNs and ECPs
81.7% 82.6%78.9% 77.4%
76.7%77.8%77.8%81.2%80.0%
83.2%
76.8%
77.6%
84.6%
79.0%
15.0%
25.0%
35.0%
45.0%
55.0%
65.0%
75.0%
85.0%
20
InternationalMalaysiaSingapore
NPL Ratio Improved to 2.1%
1,3871,123 1,031 951 869 749 617
701
683 673 652 658621
581
258290
262226 239
244286
2,3462,096
1,9661,829 1,766
1,6141,484
Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07
NPL Ratio
NPLs(S$m)
2.7%2.4%
2.1%
4.1%
3.3%
3.6%
3.0%
21
Allowances Coverage at 107%
46% 48% 48% 48% 47% 44% 43%
88%94% 97%
101% 104% 107%102%
Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07
Specific Allowances / NPLs
Total Allowances / NPLs
22
Capital Ratios Lower Due to RWA Growth, Dividend Payment and Tier 2 Amortisation
13.1 13.7 12.9 13.1 13.1 12.5 11.9
3.9 4.22.9 2.7 2.3 2.1
0.912.8
14.615.4
17.9
15.817.0
15.8
Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07
87,846
11,049
81,878
10,738
76,514
10,057
74,024
9,575
72,136
9,881
70,545
9,268
92,849Risk Weighted Assets
11,051Tier-1 Capital
(S$m)
(%)
Tier 1 CAR
Total CAR
Tier 2 CAR
23
Agenda
• Results Overview
• Performance Trends
• Results of Key Subsidiaries
• Conclusion
24
OCBC Malaysia: Quarterly Results
>1008(6)(16)(15)(Allowances)/Write-back
(9)13821103125Net Profit
(9)(54)17(41)(48)Tax
318318160188Operating Profit
6(131)23(113)(139)Operating Expenses
431420273327Total Income
1778446391Non-Interest Income
020671220Islamic Banking Income
02169198216Net Interest Income
+/(-)%RM m+/(-)%RM mRM mUnaudited Results*QoQ2Q07YoY3Q063Q07
* Based on Bank Negara Malaysia’s guidelines and Malaysia accounting standards.
25
(26)(42)(31)Allowances
23317391Net Profit
23(127)(156)Tax
19486578Operating Profit
25(303)(379)Operating Expenses
21789958Total Income
32201266Non Interest Income
573758Islamic Banking Income
15551634Net Interest Income
+/(-)%RM mRM mUnaudited Results*YoY9M069M07
* Based on Bank Negara Malaysia’s guidelines and Malaysia accounting standards
OCBC Malaysia: Year to Date Results
26
OCBC Malaysia: Financial Ratios
20.1
10.7
5.8
83.7
41.4
23.1
2.67
%
3Q06
9.012.710.712.7Loans Growth (YoY)
25.027.825.527.8Non-Interest Income / Total Income
24.621.320.623.0ROE
5.04.45.84.4Gross NPL Ratio
%%%%Unaudited Results*
78.0
41.7
2.50
2Q07
81.883.781.8RM Loans-to-Deposits Ratio
42.538.439.6Cost-to-Income Ratio
2.412.602.49Net Interest Margin
3Q079M069M07
* Based on Bank Negara Malaysia’s guidelines and Malaysia accounting standards.
27
GEH Contributed 23% of Core Net Profit
---(1)11Associates & JVs
117
(20)
(27)
(12)
175
(28)
204
S$m
2Q07
S$mS$mS$mS$mOCBC’s Results
100
(18)
(22)
(12)
150
(29)
179
3Q07
90223332Net Profit contribution
(15)(47)(57)Minority Interests
(18)(63)(76)Tax
(11)(32)(35)Amortisation of Intangibles
134367489Operating Profit
(26)(84)(86)Operating Expenses
160450575Total Income
3Q069M06 ^9M07GEH’s Contribution to
^ 9M06 include S$24m (S$16m net of tax) gains from divestment of stakes in Straits Trading and Robinson & Co
28
Bank NISP: Quarterly Results
+26bps5.17+72bps4.715.43Net Interest Margin (%)
(10)1254108112Operating Profit
7(253)51(179)(271)Expenses
(56)(45)38(14)(20)Allowances
317,7062914,15418,212Gross Loans
1259(3)6866Net Profit
(26)87115865Non Interest Income
1029140228319Net Interest Income
+/(-)%RP bn+/(-)%RP bnRP bnUnaudited Results*
QoQ2Q07YoY3Q063Q07
* Bank NISP’s contribution to Group net profit was S$7m in all three quarters of 3Q07, 2Q07 and 3Q06
29
Bank NISP: Year to Date Results
* Bank NISP’s contribution to Group net profit was S$24m in 9M07 and S$18m in 9M06.
38271375Operating Profit
49(499)(745)Expenses
242(26)(87)Allowances
2914,15418,212Gross Loans
+37bps4.635.00Net Interest Margin (%)
20171206Net Profit
87132247Non Interest Income
37638873Net Interest Income
+/(-)%RP bnRP bnUnaudited Results*
YoY9M069M07
30
In Summary
• Core earnings held up well despite market turmoil
• Nine months core revenue up 33%, core earnings up 44%
• Operating trends improved in all key business segments and geographies
• Prudent, substantial allowances for CDO exposure
• Healthy economic fundamentals in our key markets –Singapore, Malaysia, Indonesia and China
• Growth opportunities remain encouraging
Third Quarter 2007 Results
Thank YouThank You